The Economic Information and Education Center (EIEC) of KDI published the monthly periodical “Republic of Korea Economic Bulletin, March 2025” to promote a greater understanding of the Korean economy by providing readers with information on the latest economic trends and policy issues as well as relevant news and current events. 

The March publication provides updated information related to the overall Korea’s economy including Korea’s interest rate cut, Korea-Poland exchange views, meeting with global investment banks, and effective tariff rate on US imports.

Main content is as follows: 

[Economic Bulletin, March 2025]

[Current Economic Trends] ☞ Click to visit the webpage

1. Economic activity

2. Financial markets

3. Public finance

[Economic News Briefing] ☞ Click to visit the webpage 

 - Bank of Korea Lowers Benchmark Interest Rate to 2.75%

 - Acting President Choi Sang-mok Holds a Phone Call with Polish Prime Minister Donald Tusk

 - Acting President Choi Sang-Mok Holds a Meeting with Major Global Investment Banks

 - Effective Tariff Rate on US Imports Remains Close to 0% Under the Korea-US FTA

Overview

In December 2024, industrial production, services production, facilities investment, and construction investment increased, while retail sales decreased from the previous month. In January 2025, job growth rebounded while the growth of consumer prices accelerated.

In December, total production (up 2.3% m-o-m and up 1.4% y-o-y) rose, as industrial production (up 4.6% m-o-m and up 5.3% y-o-y), services production (up 1.7% m-o-m and up 1.2% y-o-y) increased. 

In December, retail sales (down 0.6% m-o-m and down 3.3% y-o-y) decreased, while facilities investment (up 9.9% m-o-m and up 13.1% y-o-y) and construction investment (up 1.3% m-o-m and down 8.3% y-o-y) increased.

In January, exports fell by 10.3 percent from a year ago due to the fewer working days. Average daily exports surged by 7.7 percent compared to the previous year.

In January, the Consumer Sentiment Index (CSI) increased by 3.0 points month-on-month to 91.2. The Composite Business Sentiment Index (CBSI) moved down by 1.4 points to 85.9 in January, while the CBSI outlook for February moved up by 2.5 points to 85.4.

In December, the cyclical indicator of the coincident composite index remained unchanged, while the cyclical indicator of the leading composite index decreased by 0.2 points.

In January, employment grew by 135,000 jobs compared to the previous year and the unemployment rate remained unchanged at 3.7 percentage from a year ago.

In January, the Consumer Price Index (CPI) grew by 2.2 percent year-on-year. The index when excluding food and energy prices increased by 1.9 percent. 

In January, Korean equity prices surged, yields for Korean Treasury Bond fell, and the Korean Won strengthened against the dollar.

In January, housing prices fell (down 0.1% m-o-m) and Jeonse (lump-sum deposits with no monthly payments) prices also declined (down 0.02% m-o-m).

Recently, the Korean economy has experienced delayed recovery in domestic demand including consumption and construction investment, along with sustained challenges in employment particularly in vulnerable sectors. Moreover, economic sentiment has worsened amid escalating domestic and external uncertainties, which are weighing downward pressure on the economy.

Amid ongoing geopolitical risks, the global economy is facing increased uncertainties in trade, including the potential imposition of tariffs by major countries. Based on the livelihood and economic response plan for the first quarter, all available means will be mobilized to swiftly prepare and implement improvement measures for each area including employment, public finance, and small businesses. Furthermore, the government will proactively respond to trade environment uncertainties, including supporting domestic companies that may be affected by the imposition of U.S. tariffs and establishing a fund for advanced strategic industries.

If you have any inquiries, please feel free to contact us.

(KDI Economic Bulletin, +82-44-550-4170, sjung@kdi.re.kr)